What is the difference between Defined Contribution Plan and Defined Benefit Plan? From the following information calculate the amount of defined…

Difference between Defined Contribution Plan and Defined Benefit Plan: S No. Defined Contribution Plan Defined Benefit Plan 1 Fixed Contributions are paid by the employer into a separate fund and will have no obligation to pay further contributions. Detailed actuarial calculation is performed to determine the charge. 2 The employer has no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits and the employee has to bear the investment and actuarial risk. The employer ensures that sufficient funds are available to meet the promised benefits regardless of fund performance and the actuarial and investment risk fall on the employer. Computation of defined benefit liability /Asset: Particulars ₹ in lakhs Present value of the defined benefit obligation as on 31.3.2024 36.00 Less: Past service cost not yet recognized (7.50) 28.50 Less: The fair value of plan assets (38.50) Defined benefit Asset 10.00 In case where fair value of plan assets is high, it may so happen that the net amount under defined benefit liability turns negative (giving rise to net assets). As per AS 15 the enterprise, in such a situation, should measure the resulting asset at the lower of: (i) the amount so determined, i.e.10 lakh; and (ii) the present value of available future refunds from the plan i.e.6 lakh. Therefore, defined benefit asset will be recognised at 6 lakhs.